NPCI's BHIM doubles transaction volume less than a year after being spun off as separate firm

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The Bharat Interface for Money (BHIM) app has more than doubled its Unified Payment Interface transaction volume after National Payments Corporation of India, which operates UPI, hived it off as a separate subsidiary in August 2024.

From around 26 million transactions during most months of the previous year, in April, BHIM recorded 54 million transactions —a significant turnaround for the app. Its market share also improved to 0.3 percent from 0.2 percent last year.

Before being spun off, BHIM was run and managed by NPCI.

In August, NPCI also hired veteran banker Lalitha Nataraj as the BHIM CEO. Since September, BHIM has been giving small cashbacks and promotions.

It is not clear if the growth can entirely be attributed to the cashback or if the app can sustain the growth momentum when the incentives are discontinued.

As reported by Moneycontrol, NPCI gave BHIM Rs 300 crore in the last fiscal for customer promotion.

Prime Minister Narendra Modi launched the BHIM app in December 2016, a few weeks after demonetisation, to promote digital payments. For a few months, it was the country’s largest UPI app.

BHIM, however, faced a steady decline after Google Pay and PhonePe started offering cashback and other incentives.

In January 2022, BHIM had a 0.6 percent market share and processed 26 million transactions. Even in September 2024, it did 26 million transactions during the month, as its market share continued to decline, even as the UPI ecosystem more than tripled the transactions during this time.

Although BHIM's transaction volume has doubled since becoming an independent entity, its 0.3 percent market share is significantly smaller than the leading UPI apps, PhonePe (47 percent) and Google Pay (36 percent).

Navi and super.money UPI apps have grown more rapidly, securing fourth and fifth places within a year.

NPCI is hoping that BHIM will be able to gain market share from PhonePe and Google Pay, as it is concerned about the duopoly in UPI payments. Both apps are run by US multinationals.

The decision to spin off BHIM’s not generated controversy, with some UPI apps alleging a conflict of interest in NPCI operating UPI and its subsidiary competing with other players.

NPCI chief Dilip Asbe has said BHIM is the trusted UPI app of the country.

“Within the NPCI, we don’t know how much attention we would be able to pay to BHIM. It needs investments, whether it's technology, whether it's a lot of marketing, building up the visibility or creating a brand. Even from a skill set standpoint, it needs a very different skill set,” Asbe told Moneycontrol in an interview.

According to sources, NPCI is hoping that three years down the line, if BHIM achieves a 4-5 percent market share, it could be sold.